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Government disregards public consultation

Disappointingly, the government disregarded a raft of concerns raised in the recent public consultation, receiving over 200 written responses on its plans to extend the reforms, first introduced to the public sector in April 2017.

19 key themes were raised from calls to delay the reform, establishing an independent appeal process and concerns over the adequacy of its online status checker - Check Employment Status for Tax (CEST).

This means businesses have nine months to prepare a compliant system for categorisation of flexible contracting workforce.

Challenges and solutions for highly-skilled workforces

At First Recruitment Group, we agree that it’s a difficult challenge for businesses that rely on a highly-skilled flexible workforce, such as the Oil & Gas, Nuclear, Technology and Rail sectors.

This is why have worked closely with public sector businesses and APSCo to learn lessons from the public sector IR35 implementation, and are helping to raise awareness of the steps businesses need to take to be prepared.

Who will be affected by IR35 in the private sector?

The changes will affect personal service companies (PSCs) who supply services through an in intermediary, and would be employed if directly engaged by an employer.

It will also affect medium and large organisations, as well as intermediaries in the private sector that engage through PSC.

Small business, as defined by the Companies Act 2006, will be exempt from the legislation.

Potential effects on UK Oil & Gas workforce

The Oil & Gas sector relies on flexible working as projects have defined timescales and need to be scaled up or down. Energy Voice have raised concern over the cost to businesses with Brian Rudkin saying, “The big challenge and concern will be around how projects are resourced going forward and whether the talent pool in the North-east will shrink going forward.”

There is a risk that some contractors will chose to work overseas so they avoid being penalised by the UK tax system, which could create a skills shortage across the Oil & Gas sector. However, it’s hard to predict how many contractors would chose to work overseas.

Lessons learned and pitfalls to avoid from the public sector

Many larger public sector businesses introduced blanket decisions in 2017, for example Network Rail, which caused skills shortages as contractors chose to work privately instead. According to a factsheet produced by ContractorCalculator, 71% of public sector projects were delayed or cancelled in the aftermath that followed IR35 changes. In particular, National Rail, HS2 and The NHS have all experienced difficulties, while TfL added a three month project delay due to a shortage of contractors.

A report released last year by professional bodies the CIPD and IPSE, discovered more than half of public sector hiring managers thought they had lost skilled contractors because of IR35 rule changes, while nearly three-quarters reported contractor retention problems.

What did we learn? Simply, blanket decisions fail to ensure a sustainable flexible workforce, so let’s not make the same mistakes in the private sector.

With complicated workforces across numerous locations, how can businesses prepare?

Only 47% of private sector businesses are prepared

According to recent 2019 research by Brookson Legal, only 47% of private sector organisations have started to prepare, already understanding the percentage of their contractors that would fall inside IR35.

Most worryingly is that 38% are “relying on gut feel alone” when it came to IR35, and that 15% had “no idea at all” how the off-payroll rules would impact their business.

Preparing your business for IR35

Is your business prepared for private sector IR35 legislation changes?

If not, then there are steps you need to start taking:

Appoint a team: Ensure you have a group of key people to can help find out key information, make decisions and implement a plan. Build in a communication plan to keep key stakeholders in the loop.

Review your supply chain: Who will conduct the review, how will you assess IR35 status, how many contractors work for you directly, how will you ensure “reasonable care”. Assess the impact on your business.

Educate your business: At First Recruitment Group we have been working closely with APSCo, attending numerous discussions and forums to understand the legal complexities, helping to produce IR35 guidance for our clients. You must not only educate your management team, but HR and Line Managers too. Keep the conversation open and honest.

Fully detail and understand your contracting workforce: This can be easier said than done when working on large scales across multiple locations and projects. Technology could be required or a team that is dedicated to assessing and documenting this information, which could push your budgets higher.

However, there is another way; we have produced detailed guidance on how to scope our client’s contractor workforces, ensuring that each is tested in line with HRMC legislation. This minimises the need for extra in-house resources by working in collaboration with our team.

Expect an increase in your 2020 workforce budget: Once you understand the scale of your off-payroll workforce, and how many will fall within scope of IR35, you can start to work this into your future workforce budgets. It’s estimated that about a third of the contracting workforce will fall within scope of IR35, with the proper assessment, but each business will differ depending on the type of contractors they require.

Would you like our detailed client guidance document?

If you would like to set your business on the path to IR35 compliance then contact our Client Development Director, Lewis Trow on lewis.trow@firstrg.com who will send you our detailed guidance document and arrange to have an informal conversation.

Testimonials

“We have required a
number of Quality Assurance/Quality Control candidates within the Nuclear
Industry. Since early 2016 First Recruitment Group have provided a number of
QA/QC professionals in locations across the UK.

“We have been very
pleased with both the quality of supply and the customer service demonstrated
and will continue to use their professional services in the future.”

Bureau Veritas

“I have worked with First Recruitment Group as my partner of
choice across a number of large and challenging Oil & Gas projects
internationally over recent years.

“First are a high performing business who are built on
credibility, honesty, expertise.

“As we push the frontiers of projects and move in to more
and more challenging and locations, First will continue to be my partner of
choice to help us deliver our projects with confidence.”

TechnipFMC

"I have had the pleasure of working with First Recruitment Group over recent years and we have formed a great working relationship. Their understanding of our exacting requirements is outstanding.

"The First team are highly experienced and knowledgeable across the recruitment spectrum and operate in the manner you would expect of a professional outfit of their stature. Their attention to detail and approach is faultless and their commitment and drive has helped our business with unique, complex and difficult recruitment requirements.

"Sarah, our Account Manager, is an incisive thinker as well as hardworking, diligent and reliable and has an extremely helpful and flexible approach to her work. This reflects in her team and with their ability to communicate at all levels in an honest and trusted consultative manner and gives us great faith in their ability to identify candidates who can help us to drive forward and achieve our business goals.

"I have no hesitation in recommending First as a recruitment partner and feel they would be worthy of selection for any engineering or manufacturing business looking for an intelligent and innovative solution."

Nuvia

“There is nothing negative about the service that we’ve received from First. Without fail they have produced positive feedback. The fact that they have placed a diverse range of skills from PA's to Engineers, just goes to show that they have the core skills, intelligence, and initiative that make them great recruiters, and preferred partners.”

Multi-Sector Client

"It’s great to work with a recruitment agency we trust. The team at First Recruitment Group are friendly and straight talking and they continue to provide an excellent service. We’re proud to still be working with them after 20 years."